Investment Q&A

Q: Can I get your thought on DLR/DLR.U vs. SGOV or BIL for parking $300K in US cash for a 4 months period? The yields are very close and additional consideration for DLR/DLR.U is that the distributions are paid every 3 months, so the holdings can be sold prior to ex-dividend date to get capital gains instead of income.

Q: Would you prefer DLR to ZMMK if you want to park cash ? ZMMK price barely fluctuates and has 3-4% yierld; on the other hand DLR provides a yield 3.5% in addition to USD fluctuation

Q: Can you suggest an us etf, where I can park us cash while waiting to invest? Thank you Ruth

Q: I only use DLR / DLR.U for Norbert's Gambit, but didn't realize that they pay a distribution until you mentioned some fairly hefty yields in a recent reply.
And sure enough, the TMX website shows yields of 6.7% for DLR and 9.5% for DLR.U, but quarterly distributions of only $0.111 and $0.082 resp., resulting in an annual yield of only ~ 3% (with minor quarterly fluctuations).
Could you please explain this discrepancy?

Q: Investing in US currencies - Can you provide some suggestions on how to participate in the strength of the US dollar as compared to the CDN dollar.Are there exchange-traded funds of exchange-traded notes that focus on exploiting US currency movements?

Q: As far as you know, is there a way to execute a gambit between USD and Euro, similar to DLR?

Thanks

Q: I would like to change a large sum of US to Canadian dollars in my trading account.
I was thinking of purchasing US stocks for companies that are traded on both Canadian and US exchanges, and asking Scotia Itrade to move the US stocks to the Canadian side of my account, thus eliminating any commission in converting this US cash to Canadian. I realize that any equity I purchase could go up or down. I'm looking for a few stable companies whose stock values don't fluctuate much. Could you rank the companies in my subject line and possibly suggest others?

Q: If I were to use DLR and DLR.U to convert currency then would this trade need to be reported when filing taxes? I'm not sure as there would not be any capital gain or loss (am I right?) If I do need to report the trade then I assume that I could claim the commission as expenses? Please clarify. Thanks in advance.

Q: Hi 5i team,

I am considering using DLR and DLR.U to buy USD and avoid the higher fees the bank charges to convert CAD to USD. But is it worth the hassle in a non-registered account because you might have a capital gain (or loss) to declare when you file your tax return the following year?

Here is an example. If I were to buy US$10,000 today my bank would charge me C$12,756. 1 CAD = 0.7839 USD

If I buy 1000 shares of DLR @ C$12.69 (plus $9.95 commission) that would cost me C$12,699.95. Five minutes later I sell 1000 shares of DLR.U at US$10.07 (plus US$9.95 commission). The proceeds of disposition would be US$10,060.95.

So US$10,000 using DLR/DLR.U would equate to C$12,624.14. That saves me C$131.86 [12,756 – 12,624.14] compared to buying it directly using the bank’s exchange rate. That is about a 1% savings.

But because this is done in a non-registered account I would have to declare the sale of DLR.U when I file next year’s tax return. From what I know you can use the “average” exchange rate for that year as per CRA, or the exact rate on the day of the transaction. So if I use the exact rate (I am guessing it would be 0.7839 as that is what the bank would charge me) I would have a capital gain of approximately C$131 to declare and then have to pay tax on that gain. At 50% tax bracket, the tax would be ~$33. So the net savings are now ~C$98. Final savings are 0.78% of the transaction. If I use the CRA’s “average” exchange rate for 2021 I could have a gain or a loss depending on what that rate is.

I can see this works fine if you do this in a registered account like an RRSP as you don’t have to declare the gain on the currency exchange, but in a non-registered account this seems like a lot of effort for small savings, at least for US$10K. Perhaps it is worth the hassle if you are converting a much large amount like US$50K, or US$100K.

Am I missing something in my example?

Paul

Q: Hello 5i team, I need to assemble a large amount of U.S. dollars (~$25,000 for an investment near and dear to your hearts). I have used Norbert's Gambit for smaller conversions in the past, which works fine except that I'm sometimes tempted to 'play trader' and to time my transactions to pick up some extra dollars. But for this large transaction, I don't want to mess around. I know I can do the gambit with any interlisted stock, but I would prefer to reduce or eliminate the risk of a price move against me. Can you recommend a good investment vehicle for this purpose? Also, can the buy and sell be done the same day, or do brokers require the first buy trade to settle before I can do the sell on the US side? Thank you!

Q: Yesterday, I did the Norbert's Gambit for the first time. It went smoothly. Thanks for the Q & A on it.......One learning, ask for the journalizing to be done inter-day as that then allows for DLR.U:CA to be sold shortly after the transaction is done.... I used Scotia iTrade and the result was a 1.6% saving compared to doing it at a bank like RBC........Again thanks for the "tip"....Tom

Q: Hi gang, can you please explain how does DLR. TO work? Who should buy it? Thanks
Alnoor

Q: Hi, is there a security or ETF available to buy/short the Canadian or U.S. dollar but denominated in Canadian dollars? Thanks.

Q: Good morning - I have owned VUS (CAD hedged US Total Market ETF) for many years in a taxable account. I would like to switch to VTI (the un-hedged version of the same ETF) but would realize a large capital gain. Is there any way an individual could synthetically gain the same USD exposure via a swap or option contract? I would obviously like to avoid high fees to do this. Thanks

Q: Hi Peter/Ryan
Last couple weeks read good information on Q&A section on moving money to US account using DLR/DLR.U. Out of curiosity what happens if I call TD rep and ask him to convert my existing 100 Canadian NTR shares to US NTR shares in RRSP account? I am assuming I will still have 100 NTR shares under US trading account with NYSE listed price at the time of transaction. This way I can keep my US dividends without any transaction cost. If this is the case i should be able to convert any stock which trades in both exchanges. Hope this is not a dumb question. Your expert advice please.
Thanks

Q: Gentlemen,
Buying DLR Can$ & sold same day as DLR.U US$,
Is it a good or bad way to exchange currency ?
There is no trading commissions on this ETF.
Thanks. Best Reagards

Q: I have cash in the US side of my TD RRSP.I would like to convert it to Can$,staying in my RRSP,so that I can buy some oil stocks that don’t trade in the US.
As recommended in Norbert’s gambit,should I buy and then sell ”DLR.u/DLR”to accomplish this?

Q: Is there an etf that will go up as the cdn $ goes down. Vrs the us$
I am not interested in double bear etf
Thanks.

Q: Between DLR and DLR.U ,which one should be owned if the US dollar declines, or the CDN dollar rises?
Thanks,
Philip

Q: I would like to deploy cash held in my Canadian $ brokerage account on the basis that the Canadian dollar will decline in value in relation to the US dollar. I am considering the purchase of ZTS BMO Short Term US Treasury Bond Index. My premise is that this ETF should be very stable in the value of its holdings but will directly reflect changes in the CDN/US $ ratio. Is this correct?

Other than paying the high bank exchange spread or deploying a Norbert’s Gambit transaction, is there a better way to institute this idea? Is ZTS a suitable ETF for this purpose?
Thanks
David